Unusually high temperatures for the autumn season are influencing the European energy market. The forecast of hot and dry weather for the coming weeks, combined with optimism regarding transit flows, have pushed gas prices down, which now stand at 38.3 euros per megawatt hour, a value not seen in a month. In contrast, the oil sector has seen a significant increase: the price of Brent has touched 75 dollars, while WTI has risen above 70 dollars in New York.

This dynamic is influenced by renewed tensions in the Middle East, where Iran has warned Israel of a “brutal” response to recent attacks. Current weather conditions have caused devastating floods in some regions, such as Valencia, and could reduce heating demand. This scenario has helped keep natural gas stocks high, with storage in Italy reaching 98.5%. Across Europe, stocks are also well above the average of the last five years.

Europe also benefits from favorable transit flows. Hungarian and Slovak companies are negotiating with Azerbaijan to secure supplies even after the transit agreement between Russia and Ukraine expires at the end of the year. The agreement currently being finalized envisages the annual supply of 12-14 billion cubic meters of gas, using the existing Russian gas network that passes through Ukraine to the European Union. The European gas market has been volatile in recent months, largely due to concerns about possible supply disruptions.

The European Commission has sought to reassure traders about the stability of supplies. It is important to note that Slovakia and Austria continue to import Russian gas via pipeline. According to Bloomberg Intelligence, Asian countries such as China and Japan could also face weak demand for gas, which could further push down LNG prices.

As for the oil market, there are several upcoming events that could affect prices: from the US elections to the Chinese Communist Party meeting scheduled for next week to the upcoming OPEC decision on production that could gradually resume as early as next month.